Abuja, Jan. 20, 2025 – The Bank of Industry (BoI) has signed a $50 million loan portfolio guarantee agreement with the African Guarantee Fund (AGF) to provide funding for MSMEs and women-owned businesses in Nigeria.
Dr Olasupo Olusi, the Managing Director of the BoI, said this in a statement on Monday.
He said the loan agreement was signed in recognition of the critical nature of Credit Guarantee Instruments (CGIs) in fulfilling BoI’s its mandate.
Olusi stressed the need for the establishment of a CGI in Nigeria, especially now that the country is planning to become a trillion-dollar economy.
He said that lack of access to finance had remained one of the most significant barriers for businesses in Nigeria as various reports indicated that only about 5% to 10% of Nigerians had access to adequate financing.
The BoI boss said that while Development Finance Institutions (DFIs) like the BoI and the Development Bank of Nigeria had made strides in supporting businesses, their capacity was limited by the need to optimise risk management.
He said a CGI could complement these efforts by mobilising private sector participation in commercial lending.
“Partnering with banks and financial institutions, the instrument could facilitate innovative lending products at lower interest rates and with reduced collateral requirements.
“This would expand the credit pool and encourage long-term investments in economic growth,” he said.
The BoI boss said a well-designed credit guarantee scheme could significantly transform Nigeria’s financial landscape by reducing lender risk and unlocking access to affordable financing for enterprises.
“As Nigeria seeks to diversify its economy away from fossil fuel dependence, CGIs can channel resources into non-oil sectors such as agriculture, manufacturing, technology, and services,” he said.
Olusi urged stakeholders, including the government, banks, development finance institutions and development partners to collaborate to bring this vision to life.
He said CGIs had immense potential to drive economic diversification, create employment opportunities, and reduce poverty.
“By reducing credit risks for financial institutions, such an initiative would make financing more accessible and inclusive for businesses across all sectors.
“This, in turn, would empower Nigerian entrepreneurs, accelerate economic diversification, and foster sustainable growth.
“A well-designed CGI program could unlock the full potential of Nigeria’s enterprises, laying the foundation for a resilient and inclusive economy.
“The time to act is now. It is refreshing to see that President Bola Ahmed Tinubu- led government is making CGIs more accessible to Nigerian enterprises in line with the pledge in his 2025 new year speech to kick off the National Credit Guarantee Company (NCGC) before the end of the second quarter,” he said. (GBN)
